Thursday, August 6, 2009

The US Tax System is the Most Progressive in the World

"In 2007—the most recent data available—the top 1 percent of taxpayers paid 40.4 percent of the total income taxes collected by the federal government. This is the highest percentage in modern history. By contrast, the top 1 percent paid 24.8 percent of the income tax burden in 1987, the year following the 1986 tax reform act.

Remarkably, the share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined. In 2007, the bottom 95 percent paid 39.4 percent of the income tax burden. This is down from the 58 percent of the total income tax burden they paid twenty years ago.

To put this in perspective, the top 1 percent is comprised of just 1.4 million taxpayers and they pay a larger share of the income tax burden now than the bottom 134 million taxpayers combined.

Some in Washington say the tax system is still not progressive enough. However, the recent IRS data bolsters the findings of an OECD study released last year showing that the U.S.—not France or Sweden—has the most progressive income tax system among OECD nations. We rely more heavily on the top 10 percent of taxpayers than does any nation and our poor people have the lowest tax burden of those in any nation."

The part of this that I find incredible is that this is just income taxes.

This lines up with the numbers at the Congressional Budget Office:http://cbo.gov/ftpdocs/88xx/doc8885/EffectiveTaxRates.shtml

That's the income tax side of revenue. If you look at all taxes, this gets a little more complicated, depending on how you look at payroll taxes. If you consider them to be 50% corporate taxes and 50% income taxes, which most people do, it's a similar outcome. Then, if you included all other federal and state tax revenue, this gets even more extreme, because the rich also pay more in capital gains taxes, sales taxes, estate taxes, gift taxes, etc.

If the far left think they're going to fund the entire government on the increased taxation of the rich, good luck.